JERUSALEM, Nov 24 (Crispian Balmer/Reuters) - The path to Middle East peace, already strewn with an array of daunting obstacles, has now got one more hurdle to overcome.

Israel's right-leaning coalition government this week passed a law that will probably force a referendum on any peace deal that involves withdrawing from land annexed by Israel, including East Jerusalem and the Golan Heights, captured from Syria.

Palestinians and Syrians have howled in protest, saying that Israel was obliged by international law to return land seized in a 1967 war and had no right to put the matter to a public vote.

Israeli analysts say such a vote will add a further level of doubt to the peace process, but believe it might remove an even bigger barrier by enabling the government to bypass the fractious parliament and appeal directly to the public.

Those who proposed this legislation did so with the intent of putting up obstacles to a deal, said Tamir Sheafer, a political scientist at the Hebrew University of Jerusalem.

But it's hard to know whether that will be the result. Many times the moment the government reaches an agreement, the public falls in line, even when the politicians don't.

The controversial law, which was supported by Israeli Prime Minister Benjamin Netanyahu, will make a referendum on handing over Israeli-annexed land obligatory if the Knesset fails to approve of the deal by a two-thirds majority.

The legislation comes at a time when US-brokered efforts to resuscitate direct Israeli-Palestinian peace talks have foundered over Jewish settlement building on occupied territory, making the prospects of a swift deal look extremely remote.

DEATH SENTENCE?

Netanyahu is considering reviving a temporary freeze on building in the West Bank to help Washington renew the negotiations, but is refusing to bow to Palestinian demands that the moratorium include land seized around Jerusalem in 1967.

Palestinians see the referendum law as a spoiling tactic designed to prevent any potential deals done under future left-leaning Israeli governments from ever being ratified.

This gives the power of veto to the Israeli side. So in my opinion, this is a death sentence for the so-called peace process, said Mustafa Al-Barghouti, an independent Palestinian politician, who ran for the presidency in a 2005 election.

However, the Palestinians also plan to hold a referendum on any eventual accord, with no guarantees that their diverse electorate, including the far-flung refugee population, will accept the likely compromises needed to seal a deal.

Israel itself has never held a referendum in its 62-year history, and previous peace treaties with Arab neighbours Egypt and Jordan were approved by parliament.

The new law does not apply to non-annexed land, such as the West Bank, but would include sovereign Israeli territory offered up as part of a land swap that any final peace accord with the Palestinians will undoubtedly require.

Opposition parties, and even some members of Netanyahu's coalition, have criticised the bill.

It's not a good law, certainly not at this point in time, said Defence Minister Ehud Barak, leader of the Labour party. A Palestinian state is in Israel's clear interest, he added.

DRIFTING RIGHT

Daniel Levy, a former Israeli peace negotiator and now a senior research fellow at the New America Foundation, said the idea of a referendum was first raised by the centre-left. The fact they have changed their mind suggested such a vote would be hard to win, he said.

It may demonstrate a realistic reading of just how far to the right politically, ideologically and demographically the Israeli public has shifted, he added, speaking from New York.

A poll published in September by the Yediot Ahronot newspaper found Israelis were divided down the middle when asked if they supported giving up the West Bank and swapping Israeli land in return for the major Jewish settlements.

However, a Hebrew University poll from March said 71 percent of Israelis supported a 2-state solution and 60 percent backed dismantling most of the settlements in such a deal.

The most heated and passionate debate would likely arise over any moves to hand back East Jerusalem. Palestinians say this will be the capital of their longed-for state, while Israel claims all of Jerusalem as its undivided capital.

Even though its allies refuse to recognise the annexation of East Jerusalem, including the Old City, for many Israelis Jerusalem is a non-negotiable part of their biblical heritage.

Shmuel Sandler, a senior researcher the BESA Center for Strategic Studies near Tel Aviv, said he backed the idea of a referendum because he did not think a majority would be found in the Knesset to accept an accord.

But he agreed that the emotive issue of Jerusalem could cause the whole process to collapse at the last moment.

If (a deal) only involves Arab neighbourhoods in East Jerusalem then it has a chance, but once we involve the Old City and the holy places it will become a very, very tough decision. (Additional reporting by Tom Perry and Allyn Fisher-Ilan; Editing by Samia Nakhoul)